Americans Procrastinate When it Comes to DTV Transition

A study conducted by DisplaySearch finds that to date, only 6% of Americans have redeemed a coupon to upgrade to a digital TV box to replace the source for their old TVs that are currently grabbing over-the-air signals. 23% of the respondents have at least one TV that is receiving programming in this manner, and close to 40% watch TV this way exclusively! As of February 2009 when the U.S. officially switches over to digital, none of these TVs will work.

Paul Gagnon, Director of North America TV Market Research for DisplaySearch points to the obvious reason of procrastination as what's holding these consumers back. This is especially so since more than half report that they do understand what the transition means, and believe that information has been adequately communicated to them.

"If a large number of consumers wait until the last minute," notes Gagnon, "there could be problems satisfying the surge in demand for converter boxes all at once, ultimately leaving some in the dark."

On the brighter side for the industry, perhaps frustrated consumers will run out to buy fancy, new flat-panel TVs so they don't miss their favourite programs. I'll bet money that there will be "DTV Transition" sales all over the U.S. targeting customers that don't want to wait in line for a DTV box for their old clunker. I can already envision taglines like "It's time to upgrade!" and "flat-panel is where it's at!" Lets face it: this is a very possible scenario considering that DisplaySearch numbers confirm over 25 million TVs that will require a transition to digital.

We've got 5 months to go. My advice to anyone in the U.S. that has an old TV and doesn't want to face the horrors of last minute rushes is to go now, grab your coupon, and enjoy a smooth transition come February.

Plasma Reaches Less Than $600

Vizio is offering a 32", 720p plasma TV through U.S. Wal-Mart stores for less than US$600, further proving just how competitive the flat-panel TV arena has become. Additionally, the manufacturer is selling a larger, 42" model for just $200 more.

Has the $600 pricing decision been made because of the stronghold that LCD technology has on the 32" flat-panel HDTV market? After all, in Q1 2008, research firm DisplaySearch reported that 32" LCDs dominate the market, representing more than 40% of total LCD TVs shipped. Indeed, it looks this way since Vizio is also launching new LCD TVs for more reasonable pricing: $1,499.99 for a 42" 1080p model and $1,899.99 for a 47" model. If Vizio is looking to help plasma increase marketshare in the 32" category, these aggressive pricing can surely help.

It's mind-baffling to think of a company essentially "blowing out" plasma TVs. How will this bode for the category as a whole? DisplaySearch indicated for Q1 2008 that, although worldwide plasma shipments grew 53% year-over-year (Y/Y) to reach more than three million units, they have shown a quarter-over-quarter (Q/Q) drop of 19%. Interestingly, 32" plasma panels actually rose 4% in the first quarter of this year to account for 15% of the market. Will Vizio's new sub-$600 plasma, which is already available in all 3,400 U.S. Wal-Mart stores, take a huge bite out of LCDs 32" pie?

Indeed pricing in the plasma category (and arguably LCD) has been dropping to meet both consumer demand and the increasingly competitive landscape. There's no doubt that a $600 plasma from Wal-Mart won't do anything to help the price erosion crisis.

And to think that just a few years ago, plasma TVs were products for just the elite of society, costing in the thousands and thousands of dollars...

CRT Well on its Way O-U-T

A new study from DisplaySearch reports something that we've already known for a long time: the traditional CRT (cathode ray tube) display is on its way o-u-t as flat-panel technologies like LCD, plasma, and OLED take over. What we fail to remember, however, is that flat screens aren't just used in those fancy-schmancy TVs that hang atop your fireplace or sit discreetly atop a lowboy stand. They are also used in everything from mobile phones, to multifunction printers, and even calculators! And this market accounts for a lot more of the growth in the flat-panel arena than we often give it credit.

In Q3 2007, digital photo frames actually led the market in growth for display applications, at 2,706% year-over-year growth, followed by 119% for industrial displays, 112% for home appliances, 98% for head-up displays, which are those you'd find in vehicles, and 62% for office products.

"Mundane consumer electronics products are getting a facelift, including applications that provided graphics information, sich as multi-function printers, and head-up displays are also becoming more prevalent," said David Barnes, Vice President of Strategic Analysis for DisplaySearch.

But back to the dwindling CRT format: while overall CRT shipments will drop from 198 million units in 2005 to a mere 26 million in 2015, flat-panels, and especially LCDs, will reach 5,440 million from just 3,177 million.

Across the gamut of sizes, from a mere 1" to a massive 100", LCD share will continue to rise: in 2007, 70% of all flat-panels were LCD. However, it's worth noting that the emerging OLED technology could account for as much as 8% of all flat-panel shipments by 2015. Meanwhile, CRT will fall to less than 1%.

[Photo: Sony showed off its attractive, and somewhat futuristic-looking, 11" OLED at the 2008 International CES. The product is actually available in stores today, although at quite a hefty price: about US$1,800. As OLED becomes easier and more cost-effective to implement into larger designs, we'll likely see many more products come to fruition].

Toshiba, PS3 Lead High-Def DVD Race

According to DisplaySearch, Toshiba led the pack in standalone high-definition format DVD players for the first three quarters of 2007, accounting for 64% more units than all of the Blu-ray manufacturers combined! The research company attributes this to aggressive pricing and promotions, and I'd have to agree: a $99 high-definition DVD player is indeed pretty aggressive! But really, what does this mean? Despite the favourable numbers, the HD DVD format is still dealing with the recent blow from Warner, which decided to exclusively join the Blu-ray camp.

Interestingly, though, DiplaySearch also reports that gaming console hardware, not standalone players, were the dominant shipped high-definition DVD product through most of 2007, accounting for 85% of all global shipments between Q1 and Q3 2007. What's more, revenue growth was more than three times that of standalone players between Q2 and Q3 of last year.

In the case of Blu-ray, it's safe to assume that the majority of PlayStation 3 purchasers bought the console to play games, with high-def movie watching as simply an added bonus (the PS3 has a built-in Blu-ray player. To achieve HD DVD playback on an Xbox 360, one requires a separately purchased player that connects to the console). Nevertheless, sales of the PS3 helped skyrocket Sony into the number-one spot worldwide for Blu-ray players, with the firm having achieved a whopping 97% share in the first three quarters of '07!

Overall, North America accounted for 80% of the worldwide market for high-def DVD hardware in Q3 2007. Worldwide, Sony, Toshiba, and Microsoft made up 98% of high-definition DVD hardware shipments, leaving all the others to fight for that remaining 2%.

Paul Erickson, Director of DVD and HD Market Research at DisplaySearch reinforced a point I've made in earlier blog posts: that the two competing formats (Blu-ray and HD DVD) not only have to compete against each other, but also against the "standard" DVD format, which many consumers are still quite content to enjoy.

"Due to consumer price sensitivity and satisfaction with regular DVD in North America," he said, "the substantial growth needed for next-generation DVD to grow beyond a niche market dominated by consoles will require time, persistence, and aggressive pricing. This is expected to be a dynamic that will persist regardless of whether the market consolidates around a single format, or continues onward with the status quo."

I couldn't have said it better myself. Let's focus on ways to make the players and, even more important, the software titles, more affordable; and added-value features more enticing...not just from one format versus the other, but in relation to the standard DVD experience.